FX round-up: Aussie pummelled following weak inflation numbers
Foreign exchange markets were little changed for the most part ahead of the upcoming policy decisions by the Federal Reserve and Bank of Japan, although traders in the Australian dollar were left nursing heavy losses.
The Aussie gave back alot of its recent gains versus the greenback on Wednesday after the latest quarterly consumer inflation data missed economists´ forecasts by a wide margin, with local news headlines talking of 'deflation'.
AUD/USD was off by 2.10% to 0.7585 as of 16:10 BST, alongside a drop of 0.66% to 0.6854 in the kiwi.
In an immediate reaction, traders began to price-in a greater likelihood of easier plicy from the Reserva Bank of Australia on the back of those numbers.
Consumer prices Down Under fell by 0.2% quarter-on-quarter in the first three months of 2016, with the year-on-year rate of change down from 2.1% to 1.7% (consensus: 2.0%).
Prices for transport and clothinig registered the largest falls.
Euro/dollar was little changed, edging higher by 0.24% to 1.1324 ahead of the US central bank´s policy statement while dollar/yen was drifting lower by 0.10% to 111.20.
The US dollar spot index was little changed, trading 0.07% lower to 94.51.
To take note of, a raft of Japanese economic data was expected overnight ahead of the Bank of Japan´s policy announcement on Thursday, with roughly half of those analysts polled by Bloomberg forecasting additional easing measures by rate-setters in Tokyo.
Cable was 0.16% lower to 1.4558 despite an 'in-line' reading on first quarter gross domestic product in the UK, which expanded at a 0.4% quarter-on-quarter clip, as expected by economists, after rising by 0.6% in the previous three months.
Nonetheless, it was unlikely that uncertainty ahead of the 23 June referendum was the main reason for the slowdown, given the turbulence in global capital markets at the start of the year, Ruth Miller at Capital Economics said.
In any case, were the UK to vote to stay in the European Union then GDP would likely bounce back quickly afterwards, she added.